Sky Quarry Inc. Fair Value Disclosure
Fair value measurements
The fair value hierarchy under the accounting standard for fair value measurements consists of the following three levels:
-Level 1 — Quoted prices in active markets that we can access for identical assets or liabilities;
-Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market; and
-Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by management about the assumptions market participants would use in pricing the asset or liability.
The following table summarizes financial instruments that are measured at fair value on a recurring basis.
|
| Basis of fair value measurement |
| |||
Asset/Liability | Fair Value at December 31, 2025 | (Level 1) | (Level 2) | (Level 3) | Valuation Techniques | Significant Inputs |
Warrant Liability | $97,486 | - | - | $97,486 | Option pricing models | Volatility, exercise price, time to maturity |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.